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‘Devoid of Distinctive Character’

Adidas Fail to Expand their Three-Stripe Protection

28 June 2019

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The General Court of the European Union (the "General Court") announced on 19 June 2019 that Adidas had lost protection of one of its three-stripe trade marks which the General Court deemed to lack distinctiveness.

Distinctive character is a pre-requisite for a mark to gain and retain registered trade mark protection. It means that a mark is capable of acting as a 'badge of origin' to identify/distinguish a product bearing the trade mark from goods of other undertakings.

It is important to exercise a degree of caution when reading some of the 'click-bait' headlines in the media on this case. This case is not a blanket loss for Adidas across all of its three-stripe trade marks. This case relates to one particular mark described as: "three parallel equidistant stripes of equal width applied to the product in whichever direction", but it still raises some issues of note.

Case background

Adidas applied to the European Union Intellectual Property Office (EUIPO) to register this trade mark (EU trade mark no. 012442166) in 2013. It was filed as a figurative mark in class 25 for ‘clothing; footwear; headgear’ in 2014.

A Belgian shoe company (Shoe Branding Europe BVBA) filed an application for invalidity with the EUIPO later in 2014 on the grounds that the mark was "devoid of any distinctive character" in the EU. The Cancellation Division of the EUIPO agreed that the registration was invalid in 2016. It held that Adidas had failed to establish that the mark had either inherent distinctive character or had acquired distinctive character in the EU through use.

Adidas appealed to the EUIPO Board of Appeal arguing that its mark had acquired distinctiveness through use (conceding that the mark did not have inherent distinctive character). The appeal was dismissed, and Adidas brought the matter before the General Court.

Arguments by Adidas to the General Court

Description of mark issue

This case illustrates the importance of filing trade mark applications clearly and precisely to represent and describe the mark. Adidas argued that the Board of Appeal should have treated the mark as a 'pattern mark' - a mark consisting exclusively of a set of elements repeated regularly (e.g. Burberry’s iconic tartan pattern) - that may be reproduced in different dimensions and proportions depending on the goods on which it is applied.

The General Court disagreed with this contention. It held that it could not deem it to be a pattern mark because Adidas' registration did not make it clear from the description that it was a pattern or anything other than a figurative mark (i.e. a mark that consists of just a figure). Adidas argued that the length of the stripes could be modified or cut at a slanted angle, however, the General Court held that it could not take into account characteristics of the mark that were not set out in the application for registration or in accompanying documents. Case law has determined that once a trade mark is filed, the proprietor is not entitled to seek broader protection than afforded by the graphic representation of that mark.

‘Law of permissible variations'

Adidas argued that the Board of Appeal had misapplied the ‘law of permissible variations’. This 'law' allows for the use of variations of a mark to be considered as use of the registered mark, provided the variations are insubstantial and that they do not affect its distinctive character. However, given the simplicity of the mark at issue, the General Court held that even a slight variation could produce a significant alteration to the mark as registered.

The vast majority of the evidence produced by Adidas to show use of the mark (consisting mainly of images) were deemed to not relate to the registered mark itself, but instead to other signs which differed from that mark significantly. Examples of such evidence included: (i) marks with a reversing of the colour scheme (white stripes on a black background), (ii) evidence of two stripes instead of three, and (iii) use of sloping stripes.

The act of reversing this colour scheme or using sloping lines could not be seen as an insignificant change compared to the registered mark and could not be relied on for acquired distinctiveness. The simpler the mark, the less likely it is to have a distinctive character. As a figurative mark, it had no word element and few characteristics, only three parallel black stripes against a white background.

Distinctive character through use

To assess acquisition of distinctive character by a mark, case law has determined that the following factors must be taken into account: the market share held by the mark; how intensive, geographically widespread and long-standing use of the mark has been; the amount invested by the undertaking in promoting the mark; the proportion of the relevant class of persons who, because of the mark, identify goods as originating from a particular undertaking; and statements from industry or other professional associations.

In this case, the General Court grouped the evidence presented by Adidas into several categories, including:

Images – most images submitted as evidence by Adidas were deemed inadmissible for the reasons discussed above. In addition, some of the evidence produced (e.g. sports bags) were in respect of items not included in the registration's specification of goods and so were deemed irrelevant;

Figures relating to Adidas turnover and marketing/advertising costs – the General Court held that it was not possible to establish a link between the figures provided by Adidas and the mark at issue. These figures presented by Adidas related to the entire business of Adidas and included goods bearing other marks and products which were deemed irrelevant; and

Market surveys – Adidas submitted 23 market surveys conducted from 1983 to 2011 in various jurisdictions in the EU by way of evidence of the mark's acquired distinctiveness throughout the EU. However, the General Court ruled that only five of these surveys (for Germany, Estonia, Spain, France and Romania) actually related to the use of the mark as registered and accurately measured the perception of the mark by the public. The General Court held that it could not extrapolate the results of these five surveys to all member states and the evidence was deemed insufficient to prove acquired distinctiveness throughout the EU. It also noted that the relevance of these five market surveys required qualification as the participants had been asked whether they had already encountered the mark in relation to sportswear and sports equipment. The General Court noted that the formulation of this question enabled the mark to be associated with a particular undertaking in the minds of those questioned.

Comment

Unfortunately for Adidas, the General Court did not agree with Leonardo da Vinci’s assertion that "simplicity is the ultimate sophistication". It found that "the simpler the mark, the less likely it is to have a distinctive character". While this decision is limited to one of Adidas' three-stripe marks and is unlikely to have major repercussions for the protection it enjoys over its many other marks, it does raise some important points that other trade mark owners would be prudent to keep in mind:

choose the correct graphical representation and description when registering a trade mark to be as clear as possible as to its representation;

ensure that only relevant evidence is filed when attempting to determine distinctiveness (Adidas was criticised by the General Court for failing to produce evidence of use of the particular mark at issue); and

exercise caution when creating surveys to avoid leading questions that may influence or bias the outcome.

This may not be the last we hear on this as Adidas can still appeal the decision (limited to points of law only) to the European Court of Justice within two months of notification of the decision.